Buddhist Economics Part 4: External Costs and Respect for Nature

All of Life is one thing. It’s interconnected and interdependent. Nothing can be created, and nothing can be destroyed. Matter can only change shape and form. And give the illusion it’s something new.

Perceiving reality in this way helps us identify some of the reasons we suffer in this lived experience. Mainly, it helps us see that the social, economic, and environmental problems we face today are all connected. The war we wage against Mother Nature embodies the principles that make us so tolerant of stark inequalities around the world. And this war is based on antiquated notions of human nature and on misunderstandings about our relationship to the cosmos.

Applying the zoomed-out, reflective lens of of Buddhism, which seeks to understand and eradicate suffering in all its forms, to economics, which aims to provide for the maximum production, distribution, and consumption of goods, helps us see how these misconceptions manifest into imperfect systems.

And once we get to this point, we can begin to update and clarify our understanding of reality, making it easier to reshape our institutions and create a better world.

About this Series

To demonstrate how Buddhist economics is a useful tool for thinking about sustainable societies, we’re presenting different pieces of the theory and contrasting it with our traditional conceptions of the economy.

The series includes discussions about the dominant economic theories of the day, and it touches on how an injection of Buddhist thought into these theories could help make them more applicable for the sustainable societies we’re trying to build.

Understanding the Problem

In today’s large, complex, and highly-commodified world, it’s sometimes quite difficult to determine the impact we are having. This makes the our participation in this war against Mother Nature seem very passive. Our impact is minimal.

For example, using a straw to drink, throwing a few recyclables in the garbage, heating a room we’re not in, or leaving a car idling are all wasteful activities. Most of us know this, but should we do something like this, we tend to hide from the impact we are having. We write them off as innocent mistakes, and in the meantime, we choose to ignore the fact that these small missteps are being taken by thousands if not millions of people around the world, exaggerating their impact.

The Immediacy of Effect

We’re able to turn our heads from this culpability largely because we experience no direct negative consequence from these actions. Or at least not immediate ones. If we throw our plastics in the garbage, or leave a window open when the heat’s on, we may waste a few dollars, but our loss is minimal, and we will forget about it moments later.

Knowing what we know about the human brain, this is what we should expect; we tend to give far more emphasis to the here and now. It’s why people still drink, smoke, or stay home on election day. There are few, if any, immediate negative consequences, and this makes easy to convince ourselves there aren’t any at all.

Time For Change

We’re reaching a point where this is no longer sufficient. We’ve progressed far as a species, but we are approaching a pivotal moment in our history. The effects of climate change are already being felt by people all around the world, and with the world’s poor expected to be disproportionately affected, we must start taking action now to improve out treatment of the Earth.

The Question of Externalities

One of the ways to do this is to take a more serious look at how we define and distribute cost in our society. More specifically, we need to pay closer attention to the externalities of our economic activity. Externalities are the costs to society that result from the production and consumption of goods and services.

Modern economic thinking has us essentially ignore these costs, and we are left to determine prices according to the cost of producing and distributing a good: the cost of raw materials, labor, shipping, etc. But this is something that will likely need to change if we hope to accelerate the speed of societal transformation.

For example, when you go to buy a car, you pay only for the cost of the materials, the labor, and then whatever other expenses were incurred by the dealership. However, when you hand over your check and drive away from the lot, the costs of that car do not cease. It will pollute the air, contributing to lower air quality and higher carbon emissions, both of which are costs to society. Yet no one pays any money for these costs.

But this doesn’t mean we don’t pay anything. Lower air quality can create respiratory problems, putting a burden on healthcare systems, and we all know how carbon emissions contribute to the greenhouse effect and climate change. Because of this, the money we spend on the car doesn’t come close to that car’s true cost to society, and this makes it difficult for us to make any meaningful progress while encouraging more sustainable habits from the masses.

The Buddhist Perspective

In this case, the Buddhist perspective is rather simple: recognize the impact of our actions.

The Buddha was very concerned with what was “right.” But he wasn’t so concerned with determining morality as he was with encouraging choices that reduced suffering. But you could not know if a choice would have this impact if you did not first understanding the origin of your suffering.

In this sense, he ends up making an ethical argument, but this is not his intention. For example, killing your spouse’s lover may feel good in the moment, but for most of us, this will eventually translate into guilt and grief, both major sources of suffering. So in this case, that which is morally right—not killing—is also what will lead to the least suffering. And this can be extended to understand that ethical action is a part of reducing suffering.

This is why “Right Action” is part of the Buddhist Eightfold Path. It’s considered essential because it helps us reduce our suffering. But we only know this with certainty thanks to the time spent studying the nature of our own suffering. With first looking withing to understand, we risk believing we can alleviate suffering engaging in activities that will actually exacerbate it.

The Impact of Scarcity

For most of our history, we have considered our environment to be a source of suffering. Scarcity and harsh conditions prevented life from flourishing. And for many species around the world, this continues to be the case.

Survival is tenuous, and existence is harsh. It’s better to adapt than to try and rise above.

But humans have a unique ability to manipulate the physical world. We can use natural resources in a way other species cannot, and this has given us the ability to rise to the top of the global food chain. But this perspective has put us at odds with Mother Nature. She appears set on destruction, whereas we are set on survival. The success of one depends on the failure of the other.

But Mother Nature will always win. This notion that we can conquer her is nothing but false hope and misguided intention. And this leaves us to take from Mother Nature and offer nothing in return. Like parasites, we consume our host to survive. And as we become larger, we come closer to being left with nothing.

Yet we are better than this. We must embrace that we are doing harm to our environment, and that this is also doing harm to ourselves. And in this process, we must recognize this is a dynamic we can change. Our ability to shape the physical world can be put to use to create a more symbiotic relationship. One where the Life systems around us receive just as much from us as we do from them.

Redefining Cost

However, getting here means changing some of our conceptions about what relieves our suffering. Jumping on a plane and flying 1,000 miles helps make a vacation special. But it’s really the time spent disconnecting from our routines and enjoying somewhere new with special people that we care about.

This doesn’t need to happen a plane ride away every time. But sometimes it does. And those who rely too much on these costly activities should be asked to carry a larger share of the burden we’re collectively placing on our natural world.

In other words, we must learn to improve our lives without increased resource use. But right now, we use resources to improve our lives, meaning any boost in well-being will automatically comes with increased environmental impact.

This doesn’t mean holding people back. Not only would this be wrong–individual freedom must always be respected–but it wouldn’t work. Part of the way we learn to live without something is to experience it first.

Yet at some point we should learn to detach well-being from resource use. And part of the way to do this is to make it harder for people to overindulge in activities that have a direct negative consequence on the environment.

Because of this, a Buddhist economist would be very much concerned with externalities. He or she would want systems in place that account for these costs. This is because these increased costs would likely be passed onto the consumer, which would provide an incentive to reduce them.

It’s still in a firm’s best interest to compete for people’s attention and hard-earned money, but by penalizing goods with a high societal cost, we’re encouraging producers to find ways to provide the same good at a lower cost as defined by environmental impact.

The Challenge of Externalities

Externalities in principle are simple. But in practice they are anything but. This is because:

It’s difficult to accurately quantify externalities. How does one calculate the environmental cost of a car? And then how does one fairly distribute these costs? Any number will invariably be highly-dependent on the perceptions and biases of whoever determines it, which is why it’s often a significant challenge to have meaningful conversations about externalities.

The idea is unpopular and uncomfortable. After all, life is already expensive. Factoring in externalities would make many of the products we need and want. And no one wants to be associated with a direct rise in the cost of living.

This is sustainability’s biggest challenge. We need to reduce our impact and our consumption, but we cannot deny others something some have already had the chance to enjoy. And this is why it’s so important to adapt a new perspective. Only by changing how we define pleasure and well-being, as well as how we get it, can we begin to shift the norm. The goal should be to train ourselves as a species to align our wants and our needs so that we can create better balance and more harmony with nature.

Policy Options Moving Forward

Incorporating externalities into the cost of the goods and services we produce would not be easy. But there are ways we can do it that get us moving in the right direction without putting too much of a burden on the average person. The following two are good examples:

Alternative Cars

As a start, we need to incentivize the production of alternative products we know have a lesser environmental impact. In a world where externalities are accounted for, products that have lesser environmental impact should be cheaper. But currently, depending on the product, this isn’t always the case. Markets are driven by demand, and the increased cost of production that comes with alternative cars makes them more expensive and therefore in even less demand, which further hurts a manufacturer’s ability to reduce prices.

Offering tax credits, or other discounts, for purchasing an electric car, for example, could be a good way to lower the cost of these products so that they are cheaper than traditional options, allowing for an increased use of these products o have an impact on reducing emissions and environmental harm.

Airline Travel

Another option would be to charge airline passengers who fly more than a few times per year. Air travel is one of the most environmentally-costly forms of transportation, yet practically no country taxes jet fuel, which makes airline tickets artificially cheap. Many people only fly once or twice a year for holiday, and the vast majority of flying is done by a relatively small group of business travelers.

Allowing individuals to fly at “no external cost” once or twice a year (which is as much as the average person flies anyway), and charging additional fees to those who fly more would help establish a price order that better reflects the true cost of flying. And this price increase would push companies to look for alternative ways of moving their employees around the world. And it would encourage the aerospace industry to find ways of operating with lesser environmental cost.

Policies such as this one seem drastic. They are. But they can, and should, also be nuanced. Depriving people the chance to live freely is never a good idea. But these policies represent an innovative way of thinking about how to create change, and it’s a path worthy of consideration moving forward.

Recognizing Impact

In this case, the perspective afforded to us by Buddhist economics is one of awareness. Each and every one of our actions has an impact on the world around us. It’s time we as individuals recognize this. But it’s also time we begin reshaping the way we do things to reflect this truth, as this is the only way we can truly progress in building sustainable societies.